Direct Grants
The Direct Grants system is by far the most simple as it is entirely direct. Recipients often must report progress after recieving funds to ensure that they are fulfilling all of their promises. This is ideal for those who can give a clear plan for how they will use those funds and is also ideal for projects who need direct funding and cannot afford to incure debt.
The importance of Direct Grants
Direct Grants are important because they are the simplest form of grants and a good way to start learning about Capitol Allocation. Direct Grants are what Kevin Owocki described in his book as Skeumorphic meaning that this method has existed before blockchain technology. There are many examples of Offchain Direct Grants or ODGs in things like government such as the Small Business Innovation Research(SBIR) and the EUs Horizon 2020 and Horizon Europe plans that offered funding to various types of research. Some examples of Onchain Direct Grants include ZCG grants and other cryptocurrency grant systems.
Pros
- Simple
- Projects don't incure debt
- Usually democratic via elected grants committee
- Not vulnerable to phantom projects as KYC and a proposal are required for a grant request which highly disencentivises phantom project attacks
- Not vulnerable to sybil attacks because grant requests require KYC
- Not vulnerable to reward manipulation because the committee can simply deny any grant request with a disproportionate reward compared to contribution
Cons
- Possible for elected committee members to not fullfull the needs of the community
- People could simply not complete all of the checkpoints and run with the money
- Bot statistics could possibly be used to falsely advertise to the committee
- A committee member could personally dislike a grantee for one reason or another and cause a service otherwise beneficial to fail